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At the request of DBIS, the Financial Reporting Lab has agreed to undertake a further short-term project to obtain views from the corporate and investment community on two specific disclosure requirements proposed in the consultation document that were not subject to testing as part of the first Lab project, namely:
The responses to DBIS’ most recent consultation highlighted some of the challenges of these new disclosure requirements. Companies need sufficient flexibility to report in a manner which is meaningful to their individual circumstances but the regulations must provide for some degree of consistency in reporting.
This second Lab project is an opportunity to help shape the final regulations as the output of the project will be a report including some specific recommendations that is published on the FRC’s website and is made available to DBIS.
Each company participating in this project will need to contribute to the development of potential disclosure formats. While participation will largely be conducted through email and conference calls, there may be a few face to face meetings. The project is expected to run over the next three months.
Once the potential disclosure formats have been developed, the Lab team will facilitate meetings with the investment community to test the disclosures and will share feedback with the participating companies. All parties involved in the project will be required to respect the confidentiality of information provided by other participants. This includes respecting the confidentiality of the names of companies and investors/analysts participating in the project until these become public (with their agreement) in the final report.
Given the sensitivity of reporting in this area, it is suggested that the involvement of each participating company is supported by the company’s Remuneration Committee, particularly the Chair.